Lancaster Colony Corp. (LANC): Are Hedge Funds Right About This Stock?

Is Lancaster Colony Corp. (NASDAQ:LANC) the right pick for your portfolio? Hedge funds are becoming less confident. The number of long hedge fund positions stayed the same which is a slightly negative development in our experience

In the eyes of most shareholders, hedge funds are viewed as slow, old financial vehicles of years past. While there are more than 8000 funds trading today, we at Insider Monkey hone in on the upper echelon of this group, about 450 funds. Most estimates calculate that this group has its hands on the lion’s share of all hedge funds’ total capital, and by paying attention to their best equity investments, we have revealed a few investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Just as key, optimistic insider trading sentiment is a second way to parse down the world of equities. Obviously, there are many incentives for an upper level exec to drop shares of his or her company, but just one, very simple reason why they would behave bullishly. Plenty of empirical studies have demonstrated the valuable potential of this method if you understand what to do (learn more here).

Keeping this in mind, let’s take a look at the key action regarding Lancaster Colony Corp. (NASDAQ:LANC).

Hedge fund activity in Lancaster Colony Corp. (NASDAQ:LANC)

Heading into Q2, a total of 10 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings significantly.

Of the funds we track, Chuck Royce’s Royce & Associates had the largest position in Lancaster Colony Corp. (NASDAQ:LANC), worth close to $89.1 million, comprising 0.3% of its total 13F portfolio. Sitting at the No. 2 spot is Yacktman Asset Management, managed by Donald Yacktman, which held a $35.4 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other peers that are bullish include Jim Simons’s Renaissance Technologies, Cliff Asness’s AQR Capital Management and Roger Keith Long’s Otter Creek Management.

Because Lancaster Colony Corp. (NASDAQ:LANC) has experienced falling interest from hedge fund managers, it’s easy to see that there were a few fund managers that decided to sell off their full holdings in Q1. Interestingly, Paul Tudor Jones’s Tudor Investment Corp dumped the biggest position of the 450+ funds we monitor, valued at an estimated $0.7 million in stock.. Steven Cohen’s fund, SAC Capital Advisors, also sold off its stock, about $0.5 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

How have insiders been trading Lancaster Colony Corp. (NASDAQ:LANC)?

Bullish insider trading is best served when the company we’re looking at has seen transactions within the past six months. Over the last 180-day time frame, Lancaster Colony Corp. (NASDAQ:LANC) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Lancaster Colony Corp. (NASDAQ:LANC). These stocks are Dole Food Company, Inc. (NYSE:DOLE), Cal-Maine Foods Inc (NASDAQ:CALM), Sanderson Farms, Inc. (NASDAQ:SAFM), Post Holdings Inc (NYSE:POST), and The WhiteWave Foods Co (NYSE:WWAV). This group of stocks are in the food – major diversified industry and their market caps are closest to LANC’s market cap.

With the returns demonstrated by Insider Monkey’s research, retail investors should always monitor hedge fund and insider trading sentiment, and Lancaster Colony Corp. (NASDAQ:LANC) applies perfectly to this mantra.

Click here to learn why you should track hedge funds